ABN AMRO ups house sales forecast

The number of houses sold this year is likely to be significantly higher than first projected. According to its latest Housing Market Monitor, ABN AMRO Group Economics now expects transaction numbers to increase by 15% relative to 2016, quite a jump compared with its earlier forecast of 5%. House prices are also likely to rise at a faster pace than initially anticipated. Group Economics sees prices rising by 7% in 2017 rather than 5% as they suggested earlier, bringing the house price average closer and closer to its 2008 record high.

For 2018, ABN AMRO Group Economics has also finetuned some of its forecasts, now projecting not a 3% but a further 5% price rise next year. The economists do, however, still expect house sales figures to drop in 2018 relative to this year. ABN AMRO has pencilled in a 5% decline.

Strong performance, low mortgage rates ABN AMRO economist

Philip Bokeloh explains the adjustments to the forecasts. "The average asking price for a house is currently 331,000 euros. That’s 7.6% higher than it was a year ago. A major factor driving this surge is that the housing supply is becoming tighter. Although construction activity is picking up, new homes are not coming to market fast enough to keep up with the growth of the number of households. We don’t see this situation changing in the foreseeable future. Meanwhile, mortgage rates are still low. We expect them to increase in the course of 2017, but the uptrend is more gradual than we first thought. Based on the housing market’s strong performance in the first five months of 2017, plus our downwardly adjusted mortgage rate assumptions, we’ve upped our forecasts."

Strong performance, low mortgage rates

ABN AMRO economist Philip Bokeloh explains the adjustments to the forecasts. "The average asking price for a house is currently 331,000 euros. That’s 7.6% higher than it was a year ago. A major factor driving this surge is that the housing supply is becoming tighter. Although construction activity is picking up, new homes are not coming to market fast enough to keep up with the growth of the number of households. We don’t see this situation changing in the foreseeable future. Meanwhile, mortgage rates are still low. We expect them to increase in the course of 2017, but the uptrend is more gradual than we first thought. Based on the housing market’s strong performance in the first five months of 2017, plus our downwardly adjusted mortgage rate assumptions, we’ve upped our forecasts."

Approaching 2008 high

The last time house prices soared like this was in 2002. But back then, the pace of inflation was considerably higher, which means that in real terms, the current boom is actually bigger. If prices continue climbing at this rate, the market will soon approach the record level of 2008, just before the financial crisis. Group Economics does see regional differences, however. In the larger cities, the number of houses selling for more than the asking price is relatively high, while in surrounding municipalities prices are also surging.

Run on older properties

With more and more home owners trading up, the strongest price rises - 8% - were seen in the 250,000 euros and up segment. In the cheaper segment, prices were up by 7%. At the moment, apartments are more popular than semi-detached and terraced houses. The prices of the latter, in turn, are climbing faster than those of detached homes. Buyers currently favour pre-war over post-war houses and apartments, a result of the trend towards living in the city, and preferably as close to the centre as possible. Such neighbourhoods naturally feature more older properties.